Profit from Change. Troy Korsgaden
the opportunities that you already have by taking a holistic view. It’s a mind set, really. Each customer lives in a household. That household could be made up of just one person, two people, or an entire family. The people in the household could be related or not. Society has changed. Households are now diverse. It really doesn't matter. What’s important is how much information you have about the household and its inhabitants. Let’s look at both typical and atypical households. You’ll quickly see where those opportunities lay.
HOUSEHOLD #1
The Johnson household is traditional, consisting of a married couple with two children. They live in a house and have a mortgage. Both spouses work outside the home, so each adult has an auto. The children are 12-year-old Melissa and 16-year-old Scott. You know the Johnsons like to water ski and own a ski boat.
Using just this basic information, you can begin to determine the Johnson family’s insurance needs. They need homeowners insurance, they need an auto policy on two cars, they need a policy on their boat, they need life insurance on both adults, and they may need an umbrella policy. They also need a college savings plan for both children, and they need to save for retirement. Scott will be driving soon, which means they’ll need additional coverage for that as well.
This is where the change in how you think about your customers comes into play. You have to look at what the customer needs for his household instead of looking at just the existing policies. It’s a total reversal in how you regard your customer. Looking at the Johnson household in its entirety, what is the potential for insurance and financial services products? Count them up:
— 1 homeowners policy
— 2 auto policies
— 1 umbrella policy
— 1 boat policy
— 2 life insurance policies
— 2 college savings plans
— 2 IRAs
Minimal potential: 11 products
Other possibilities include life insurance for the children, disability insurance for the parents, health insurance for the family, and, as you learn more about the Johnsons, you may discover additional needs such as insurance on jewelry, furs, and so on.
HOUSEHOLD #2
The Smith household is upper-middle class. Mr. Smith owns an electrical contracting business with 10 employees. Mrs. Smith is a homemaker busy with three active children: Justin, age 10, Jennifer, age 4, and Jeremy, age 2. The family owns a vacation cabin in the mountains, two cars, and a boat.
Even though you don’t have much information on this household, it’s easy to determine the family’s basic needs:
— 2 homeowners policies
— 1 umbrella policy
— 2 auto policies
— 1 boat policy
— 2 life insurance policies on the two adults
— 3 life insurance policies for the children
— 3 college savings plans
— 1 retirement savings plan
— 1 commercial policy for the business
— Insurance to cover the business’s trucks
— Workers’ comp for the employees
— Disability insurance on Mr. Smith as the sole breadwinner
Minimal potential: 19 products
Does Mr. Smith’s business have a 401(k) plan for its employees? There may be potential to write insurance on each of the employees and their households. The possibilities just keep multiplying and multiplying. You’re starting to get the picture.
HOUSEHOLD #3
This household consists of two working professionals in their early thirties: John Jackson, a physician, and his live-in partner Mary Bennett, a computer systems consultant. They own a home together and each has a luxury automobile.
Their household needs:
— 2 auto insurance policies
— 1 homeowners policy
— 2 life insurance policies
— An investment plan for retirement
— An umbrella policy
Minimal Potential: 7 products
If you think beyond the basics, you’ll also see that Mary needs additional coverage on the computer equipment in her home office, and Dr. Jackson needs insurance for his medical practice and workers’ comp for his employees.
That’s just the beginning. This couple could be an excellent referral source to your agency from their peer group, so the potential for add-on business is excellent.
HOUSEHOLD #4
Take a look at the household of Penelope White and her two children, Michele, age 5, and Jonathan, age 7. Also sharing the household is Jim Carrington and his 10-year-old son Peter. Both adults work outside the home, they rent a house, and each adult has an auto to commute to work. What is the potential in serving the needs of this household?
— 1 renters insurance policy
— 2 auto policies
— 3 investment plans for college savings for three children
— 2 investment plans for retirement
— 2 life insurance policies
— 2 disability policies
Minimal potential: 12 products
These example households are presented to spark your thinking about the potential in your own database of customer information—and how to better analyze that information. I’ll help you do that in the following chapters, but even now, start thinking about how well you really know your customers. Do you know how they spend their leisure time? Do you know the names and ages of their children? Life changes, people change, they get married, they get divorced, they have children, they start businesses, they start a new career, the children grow up. All of these events trigger a change in the needs of that household. If you’re current with your customers you can capitalize on the possibilities and truly serve their needs.
The Deeper Penetration Approach
Now that you’ve seen how sales opportunities can multiply when you peer into each household with an all-encompassing view, take a look at what happens when you run some simple numbers based on patterns in our industry. For instance, it used to be that every household had the potential for seven sales. But as demonstrated in the previous examples, today’s households are much more diverse than in the past. That’s good news for us, because with all that diversity, the potential for sales has expanded to 10—at least. For an agency with 1,000 households, that means it has the potential for 10,000 new sales in its existing book of business.
Now take into account that our industry’s “hit ratio”—the average number of people you can sell to if you see them under the right conditions—is 20 percent. Do the math and you’ll see that the hit ratio factored with the potential means our 1,000-household agency can score an additional 2,000 policies in its book of business. The agency doesn’t have to drum up new customers to gain those sales. It only has to seize the opportunities that are already there. That agency? It could be yours.
What About Single-Policy Households?
Savvy agents are putting their energy into areas where the greatest return exists, and that’s clearly in the multi-policy household. They’ve learned that single-policy households simply aren’t cost efficient. That’s not to say that agents are abandoning mono-line customers without an opportunity to turn them into something more, but they’ve elected not to spin their wheels endlessly. Eavesdrop on a savvy agent about